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Financial Regulatory Developments 9 January - Council of the European Union (Council)

Council reports on benchmark Regulation progress: The Council has published a progress report on the proposed Regulation for indices used as benchmarks in financial instruments and financial contracts. The outgoing Italian Presidency said Member States agreed on most issues but a couple are still under debate for the incoming Latvian Presidency to take forward:

defining critical benchmarks and identifying their implications; and

whether to keep ESMA binding mediation or create a college of supervisors for each administrator providing at least one benchmark.

Presidency reports on bank structural reform: The outgoing Italian Presidency has reported on the progress of proposals for bank structural reform. It has been working on a revised proposal, and notes the key outstanding elements as:

the treatment of proprietary trading: many Member States saw the original definition as making the proposed ban on proprietary trading easy to circumvent. Many also wanted to separate proprietary trading activities rather than to ban them outright;

supervisory decisions on separation: there was significant debate on the metrics that supervisors should use when assessing whether to require separation;

the legal, economic and operation links between the core credit institution and the trading entity: there was general support for a holding company model, and for following the Capital Requirements Regulation (CRR) approach to large exposures;

interaction between competent authorities and resolution authorities: Member States had pressed for greater clarification;

powers and duties of home and host competent authorities: the Presidency has considered measures which give the right balance of consultation without imposing undue complexity; and

derogation from the requirements: many Member States were unhappy that the Commission should have power to derogate from the law as they felt this would set both a precedent and an unlevel playing field.

Compare jurisdictions: Secured Lending

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